Question Period Note: CAF SALARY INCREASE

• The Government of Canada is committed to ensuring that members of the Canadian Armed Forces are properly compensated for their service.
• On August 8, 2025, the Prime Minister announced pay increases retroactive to April 2025 - as well as new benefit and compensation initiatives which will be rolled out over the next twelve months.
• These increases will contribute to Canada’s commitment to meet NATO’s military spending target and better enable CAF meet recruitment targets in the coming years.
• The calculation of the Income Replacement Benefit (IRB) delivered by Veterans Affairs Canada is based upon monthly military salary – accordingly, the recently announced increases in monthly military salary will be reflected in IRB calculations for eligible Veterans who release on or after April 1, 2025.

In keeping with its commitment during the 2025 Federal Election, on August 8, 2025, the Government formally announced its intention to increase CAF salaries, as well as introduce new pay benefits and compensation initiatives.
The Department of National Defence (DND) is implementing increases on top of base pay retroactive to April 1, 2025. Additionally, DND will introduce additional allowances and benefits including a new Military Service Pay benefit, calculated based on years of service, over the next 12 months (details forthcoming).
These changes to CAF pay will contribute to Canada’s commitment to meet our current NATO defence spending target of 2%, and to increase this spending to 5% of annual GDP in defence by 2035 (of which 3.5% will be focussed on direct defence spending).
These increases are also expected to assist in DND’s recruitment efforts.
Income Replacement Benefit
VAC’s Income Replacement Benefit (IRB) recognizes and compensates eligible Veterans for the economic impacts that health problems, resulting primarily from service, have on their ability to earn income and save for retirement.
The calculation of the IRB ensures that eligible Veterans under the age of 65 receive benefits equivalent to 90% of their “imputed income” while they are participating in VAC’s Rehabilitation Program. For most Veterans, this “imputed income” is equivalent to 90% of their monthly military salary at release adjusted forward until IRB is payable.
Accordingly, the increases to CAF salary (excluding bonuses and allowances, which are not included in the calculation of IRB) will result in commensurate increases to IRB.

QUICK FACTS & FIGURES

VAC Contributions to Canada’s NATO Commitments
• VAC is the second largest contributor (after DND) to Canada’s NATO spending.
• Over the past 10 years VAC’s contribution has increased from $2.1B to $7.3B.
Releasing CAF Members – Statistics
• An average of 6,800 Veterans released from CAF each year over the past 5 years; of these, approximately 1,860 (27%) released medically each year.
• Regular Force members are more likely to release medically and access the Income Replacement Benefit (IRB).
o Of the 21,200 CAF members who released from the Regular Force over the past 5 years – of these, approximately 8,400 (40%) released medically.
Income Replacement Benefit - Statistics
• In 2023/24:
o 31,477 IRB clients;
o $1.26B in program expenditures.